In remarks to a Committee of the European Parliament, ECB Vice President Luis de Guindos said, Russian invasion of Ukraine has “cast a dark shadow over” Europe, as a human tragedy and affecting the economy. Economic activity is expected to continue to growth this year, “albeit at a slower pace than was expected “. The war has “amplified the impact on consumer energy prices”.
The surge in energy prices is “reducing demand and raising production costs” while the war is “weighing heavily on business and consumer confidence and has created new bottlenecks.” These developments point to slower growth in the period ahead.
Prices increased will “most likely remain high over the coming months”. Medium term inflation expectations indicates inflation ares around the 2% target. But, ” inflation expectations have been rising in recent months though and initial signs of above-target revisions in those measures warrant close monitoring.”
He reiterated that the APP will be concluded in Q3 and changes to interest rates will follow “some time after” the end of the net purchases, and will be “gradual”.
